Microsoft released the first version of its customer relationship management software on Tuesday.

The world's largest software company is slightly behind schedule with the release of the product, its first foray into a multibillion-dollar software market ruled by Siebel Systems and SAP. Until late last month, Microsoft had promised to deliver its CRM applications, one of the first new products out of its newly formed Business Solutions unit, by the end of last year. The company announced its intention to develop a new CRM product last February.

The company bills Microsoft CRM as a scaled-down version of the sprawling packages offered by SAP, Onyx, Epiphany and Siebel. Microsoft's applications are designed for companies with fewer than 500 employees, bringing them into head-on competition with products from companies like FrontRange Solutions, Best Software and Salesforce.com.

Microsoft CRM is intended to help small companies keep track of sales leads, accounts and orders--thereby improving sales force productivity and customer satisfaction. It should also help service representatives track and resolve customer service cases, according to Microsoft.

The software is designed to easily exchange data with Microsoft's desktop applications including its Outlook e-mail package and Internet Explorer browser. A more advanced version is built to exchange data with Microsoft's corporate accounting and financial applications. However, the latter feature is not yet available. Microsoft said the software component linking Microsoft CRM to its Great Plains accounting applications will be available by April.

As previously reported, Microsoft CRM licenses cost $395 per user for the Standard Edition, while the Professional Edition costs $1,295 per user license. Both require Windows 2000 Server. The Professional Edition includes features for more complex setups with tools for business work flow, application customization and business-system integration. The applications are also available as a hosted service through ManagedOps, a Microsoft reseller partner in Bedford, N.H.

For now, Microsoft CRM is available only in North America. The company plans to release an international version of the software by the end of the year.

Several reseller partners said that while the product is competitively priced, it lacks the depth of features that some competitors offer. For instance, they said Microsoft CRM is harder to customize than the competing applications that cost roughly the same. Microsoft is relying instead on the new product's ties to its upcoming line of .Net software as a main selling point, said one reseller.

"You're buying into a vision--Microsoft's vision of what the future of computing platforms is going to be," said Ben Holtz, president and chief executive of Green Beacon Solutions, a CRM consulting company in Watertown, Mass.

Another Microsoft reseller pointed out that although Microsoft CRM appears affordable at first glance, the product has hidden costs. After including the expense of other Microsoft products required for the applications, the full price quickly climbs beyond Best Software's SalesLogix and FrontRange's Goldmine products, said Jack Bender, project manager at ePartners, a Microsoft and Best Software reseller in Irving, Texas.

"There are too many ways to rip Microsoft apart on this one," said Bender. "It's going to be like taking candy from a baby."

In addition to Windows 2000 Server, Microsoft CRM requires SQL Server 2000, Active Directory and Internet Explorer 5.5, according to Microsoft. The company also recommends Exchange Server 2000 and Office 2000 or XP, to take full advantage of the software's features. None of those products is included in the sticker price of Microsoft CRM.

But Holly Holt, Microsoft's senior product manager for CRM, said the company did its research and believes its prices are on par with those of the competition. Many CRM competitors, including Best Software and FrontRange, have similar system requirements or soon will, executives from those companies said.

In another new development Tuesday, Microsoft said that it has signed a distribution deal with electronics distributor Ingram Micro to make Microsoft CRM Standard Edition available for resale through the entire network of 810,000 Microsoft resellers. Previously, the company planned to sell Microsoft CRM only through its smaller network of 4,500 Business Solutions resellers. A company representative said Microsoft has so far trained 600 resellers to install Microsoft CRM.

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